A new batch of data from Statistics Canada always makes headlines. However, the aging population figures released recently did not surprise Quebec employers who have lived here every day for several years: they cut their hair to find workers.
There is no miracle solution, not even ten thousand. Some have been identified.
One of them is, of course, to keep older people in the labor market. I insist on this point, because keeping a 65-year-old at work addresses several issues at once, including the financial health of the people concerned.
How can we do this? Here are some solutions:
1. Keep more of their payroll
The question is already addressed here in fragments. Readers who extend their careers beyond the “normal” retirement age regularly complain that they have too little money in their salary after taxes and social security contributions.
To encourage older people to stay at work, they must feel that it is worth it.
At age 65, a worker must have the choice of whether or not to continue participating in the Quebec Pension Plan (QPP). Currently, he must pay a contribution of 6.15% to his income between $ 3,500 and $ 64,500, and double that if he is self-employed. These contributions entitle him to a “supplement” pension, but as he gets older, the risk of leaving money on the table increases.
The pension supplement will certainly be beneficial, but only older workers see their wages depleted, which has a deterrent effect.
2. RRSP/RRIF adjustment
Currently, we are required to convert our RRSP to RRIF in the year we step into 71. The problem is that you have to withdraw the minimum amount from your RRIF each year. If you are still earning a salary at this age, or if you are charging fees, this rule may be penalized. It’s time to restore the age limit for converting an RRSP to an RRIF up to 75 years.
Another annoying thing about the RRSP: it is impossible to contribute to a workers ’fund after age 65, and therefore take advantage of a 30% tax credit on your RRSP contributions. Why not raise this threshold to 70?
It’s true that CSN’s Fondaction and FTQ’s Solidarity Fund have been overflowing for two years to the point of limiting new contributions. The situation is further explained by the additional savings generated by the pandemic. The effect should disappear over time.
3. The role of the tax credit for career extension
In 2012, Quebec introduced the tax credit for experienced workers, which became a “credit for career extension”. At first it was a bit cluttered, it has greatly improved over time. I don’t know if we should give all the credit, but the activity rate in the over 60s has improved since it was implemented.
The Chair of Taxation and Public Finance at Université de Sherbrooke has documented the beneficial effects of this measure. However, he mentioned one problem: it does not benefit low -income workers. This is a “non -refundable” credit, so you have to pay tax to benefit from it.
Luc Godbout, chairman, believes a “refundable” tax credit will encourage more seniors to return to the job market, part-time.
The tax professor made some calculations The newspaper for a 66 -year -old receiving $ 5,000 from QPP, the Old Age Security pension (PSV), the Guaranteed Income Supplement (GIS) plus a salary of $ 5,000. Not rich … If he spends twice as much time at work to improve his situation, he has 58.9% of his additional extra income left.
By making the tax credit for career extension “refundable” and eliminating QPP contributions, he would remain at 75.4%.
4. A flexible working environment
That’s good, taxation, but an important part of the solution is in the companies. There will come an age when you want to continue working, but not 40 hours a week or 48 weeks a year. It should be noted that the activity rate of Quebec adults is rapidly declining from the age of 60. This is a sign.
Employers should be open to reduced and flexible working hours for their veterans. I hear objections, such as those according to which the implementation of telework on a large scale is impossible … Until we had to do it to see that it works for the good of all.
There is no doubt that we have reached that point with regard to special arrangements for our most experienced forces.